Have you been honing your skills trading stock or stock options but find it frustrating at times? Maybe you’re often unable to go short easily, or you’re waiting until the market opens to trade impactful news events. Perhaps your trading potential is just limited by your account size. The solution to all these barriers and frustrations is futures trading.
Why futures trading?
There are many benefits to futures trading, including the ability to:
- Trade a more diverse, uncorrelated universe of symbols spanning a wide array of financial instruments, forex currencies, Bitcoin, vital commodities like gold and crude oil, and many agricultural products.
- Trade all these markets on margin, allowing you to control a much larger position with fewer dollars. Although this increased leverage provides greater profit potential, it also comes with increased risk of substantial losses.
- Trade at all levels, thanks to a choice of contract sizes—including Micro contracts, which allow for more flexible trade sizing for scaling into and out of positions with less capital.
Applying your stock market analysis skills to futures trading
The market analysis skills you’ve honed trading stocks will be invaluable in futures trading. Understanding company earnings, economic conditions, and global news events will serve you well in trading major market index futures. When trading commodities like gold or crude oil, you can repurpose your skills to analyze supply and demand, economic news events, and intermarket relationships. You can also expand your technical analysis horizons with futures market-centric indicators like floor trader pivots and commodity price channels.
Applying your risk management skills to futures trading
Risk management is another crucial skill that translates seamlessly into futures trading. You've learned the importance of following a risk management strategy, which includes stop loss orders, trailing stops, and consistent trade sizing. You can also tailor your risk tolerance by selecting markets with high or lower volatility.
Trading futures with a stock and options trading mindset
You can sharpen the same stock trading plan you’re implementing now into your futures trading plan with just a few minor tweaks. While learning to develop trading plans, whether for the stock market or options trading, you’ve also adapted a trader’s mindset that includes key traits of a futures trader, like patience and discipline. Such traits will serve you well in your futures trading journey.
Futures trading is often a high-energy and stressful activity, where traders need to consistently overcome dynamic market conditions with high volatility and wild price swings. But for those traders dedicated to the craft who want to grow beyond stock and options trading, futures trading offers more unique opportunities and trading flexibility than any other trading market.
Apply your stock and options market skills to the futures markets
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